Marketers use customer segmentation to better understand their prospects and develop targeted campaigns with strategic messaging that drives conversions.
Marketers can segment potential customers by their location (geographic segmentation), population-based factors (demographic segmentation), engagement history (behavioral segmentation), or personality and lifestyle (psychographic segmentation) – but for business-to-business (B2B) SaaS marketers, the most critical type of customer segmentation is firmographics.
Firmographics (a portmanteau of firm and demographics) is the B2B marketing strategy of describing and segmenting prospects (and customers) based on organizational attributes like age, size, location, and performance.
B2B SaaS marketers use firmographic segmentation to establish an Ideal Customer Profile (ICP), define their Total Addressable Market (TAM), augment buyer personas, and to inform the development of targeted marketing campaigns that drive conversions in each identified firmographic segment.
Firmographic variables represent the different attributes that B2B marketers can use to describe or categorize companies in their target audience. Below, we describe six of the most important firmographic variables used to segment customers in B2B SaaS.
B2B marketers can describe or segment prospects by the industry in which they operate. Traditional industries are codified under the Standard Industrial Classification (SIC), which includes categories for:
While our economy has shifted markedly from manufacturing to services over the past several decades, the SIC has been slow to update its industrial classification system to reflect the new environment.
When prospects can’t be meaningfully described or grouped by SIC codes, marketers can and should create new frameworks based on first-hand knowledge of their prospects and customers.
B2B marketers can describe or segment prospects based on the ownership status of the company, which often directly impacts its spending requirements, objectives, and the motivations of its leadership team. Prospects can include both publicly and privately held firms, as well as government agencies and non-profit organizations.
B2B marketers can describe or segment prospective customers based on the location(s) where they operate or maintain a business presence. This is the same as geographic segmentation, but applied to businesses instead of individual consumers.
Segmenting by location allows marketers to deliver more personalized and contextually relevant messaging to prospects in different cities or regions of the world.
B2B marketers are often interested in describing or segmenting prospective customers based on how long they have been in business.
Older companies often have long-established ways of working and may be resistant to change, while newer companies striving for a competitive edge may be more willing to adopt new solutions if your business can demonstrate clear value. For example, sales data might show that your B2B sales cycle is 50% longer for firms that have been in business more than 10 years.
On the other hand, older companies that have survived for longer and systematized their operations may be more stable and reliable customers. Your sales data might show that firms with more than 10 years in business have a 50% higher lifetime value (LTV) than those without.
Either way, B2B marketers benefit from understanding how the age of a prospect impacts their likelihood to convert into a customer.
B2B marketers can describe and segment firms by their size, using metrics such as:
Understanding the size of your ideal customer with firmographic segmentation helps your sales team stay focused on converting customers with the strongest potential to add revenue to your business.
B2B marketers can use firmographic segmentations to categorize prospects in terms of their recent financial and business performance, looking at metrics such as:
A firm that’s been growing steadily and achieving great results might be hesitant to change strategies, while firms that are stable or declining in performance might be more willing to gamble on new solutions that could increase their efficiency or help reverse their fortunes.
Firmographics uncovers valuable insights that can help B2B marketers identify their most valuable prospects and convert those prospects into customers. Firmographic segmentation is used to construct ideal customer profiles, augment and inform buyer personas, and help marketers develop targeted campaigns that win customers with the highest value to the business.
As part of our Customer Generation methodology at Directive, we leverage 1st-party data, including firmographics, to map Total Addressable Market (TAM) and identify the most valuable customer segments for our B2B SaaS clients. Laser-targeting our marketing approach means that we can aggressively scale advertising spend to drive real revenue growth for our customers.
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